Wendy Lucas-Bull, who steps down as Absa chair at end-March, says the biggest challenge of her nine years at the helm was overseeing the bank’s divorce from Barclays, its former UK parent that once owned as much as 62.3% of the lender.
She also cites the separation as the biggest achievement of her term, which in the past two years alone saw her grapple with a global pandemic; the sudden exit of Absa’s first black CEO; a series of significant data leaks; and the economic fallout of the July 2021 riots that rocked parts of KwaZulu-Natal and Gauteng. More recently Absa found itself embroiled in a nasty legal battle with former board member Sipho Pityana, who is now suing the bank and the Prudential Authority (PA) after losing out to Sello Moloko as Lucas-Bull’s replacement.
Yet it is Absa’s three-year long separation from Barclays, from mid-2017 to mid-2020, that Lucas-Bull cites as the crowning achievement of her tenure. Having commenced her term in 2013 just ahead of Barclays’s African operations being merged with Absa, the last thing on her mind would have been separation.
“Most of our shareholders were very sceptical of our ability to land a project the size of R14.6bn in three years and still be standing,” Lucas-Bull tells Business Day in one of her final media interviews as Absa chair. “Most projects that size run late and don’t deliver. But the project finished on time and R1bn under budget.”
The R14.6bn figure is the divorce settlement Lucas-Bull says Absa had to convince Barclays to pay to help it rebuild some of its internal skills capacity after years of centralisation under the UK parent caused many processes to be run out of London. This included having to rebuild everything from Absa’s internal auditing capacity to fraud analytics, cyber security and even human resources capabilities.
When Barclays first announced that it wanted to sell its 62.3% majority stake in Absa in 2016 — just three years after creating Barclays Africa by merging its African operations with Absa — it had originally banked on simply selling its stake by running book-builds with institutional investors. That meant the UK lender never factored in the true cost of the Absa separation.
“Have we got strong black talent that I’m really proud of that we’ve built? Absolutely. Are they being poached by other organisations? Absolutely
— Wendy Lucas-Bull, outgoing Absa Group chair
“We said to them that actually as a result of you being a 62% shareholder we’ve had to centralise all sorts of stuff with you ... now we’re going to have to decentralise,” says Lucas-Bull. “So the negotiation went from: it’s going to cost them nought to it’s going to cost R14.6bn. That was the separation cost we agreed finally with them that they would pay.”
Lucas-Bulls says negotiating that sum from Barclays took many months and resulted in several breakdowns, prompting hasty flights to London to keep the talks moving. Eventually, the settlement was paid up front in pounds, she says.
That allowed Absa to expand its budget for the separation to R16.2bn over three years thanks to gains from currency movements and interest payments on the full cash settlement. Barclays also made a contribution towards BEE by putting a small percentage of its Absa stock into a trust that will form part of the group’s future empowerment efforts.
“Getting a settlement that was right for Absa and Absa shareholders was a major achievement,” she says.
But what of the more recent issues caused by the sudden departure of former CEO Daniel Mminele in April 2021 and the sacking of Pityana in November that year, both of which prompted severe criticism over Absa’s transformation efforts? With Absa naming its retail and business banking (RBB) head, Arrie Rautenbach, as CEO on Tuesday it is likely to cause its transformation efforts to come under further scrutiny.
Strong pipeline
“The fact that the situation with Daniel didn’t work out is a huge disappointment to me personally and to the board,” says Lucas-Bull. “Part of what Daniel did was ... more towards centralisation. We just knew that wasn’t right for Absa because we’d learnt some very painful lessons [under Barclays]. We just couldn’t get a meeting of the minds between the board and Daniel.”
Lucas-Bull says Rautenbach’s appointment is not a sign the bank is averse to transformation, and insists that it has a strong pipeline of black talent. She cites Punki Modise, who was named interim CEO of Absa’s RBB unit in place of Rautenbach.
“There’s a war for talent, and there’s a war for strong black talent,” says Lucas-Bull, citing the loss of Bongiwe Gangeni who was headhunted by Standard Chartered towards the end of 2021 and now lives in Dubai.
“Have we got strong black talent that I’m really proud of that we’ve built? Absolutely. Are they being poached by other organisations? Absolutely.”
On the Pityana issue, Lucas-Bull is somewhat more circumspect citing the pending court cases he instituted. But she disputes his allegation that it was former Absa CEO Maria Ramos who tipped the bank off about sexual harassment allegations against him when he was chair of AngloGold Ashanti. Lucas-Bull says it was actually Pityana who told her of the allegations confidentially. Further details emerged later when Absa opted to investigate the circumstances of his hasty departure from the gold miner in December 2020.
“He’s assuming that the only factor in the board’s decision was this thing, which is not necessarily the case,” she says. “When you’re looking at candidates there’s a number of issues that come into play. The board made its decision ... that the external highly credible candidate was the right call.”
That external candidate is Moloko, who takes over from Lucas-Bull on the inauspicious date of April 1 while she moves on to be Shoprite chair after being named chair-designate at the retailer in October 2020. Not only does she replace Christo Wiese who spent 30 years in the role, but she also becomes Shoprite’s first female chair.
“I’m hugely proud of where [Absa] is now. The organisation is in great shape,” she says. “It has delivered great results, given confidence to the team and given confidence to the market. It’s a great opportunity for Arrie and for Sello.”
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.